House Rents Rise Despite Easing Vacancies
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House Rents Rise Despite Easing Vacancies

Asking rents for Sydney houses jumped by 19.4% over the year to May

By Terry Christodoulou
Tue, May 17, 2022 1:15pmGrey Clock < 1 min

April saw the first rise in vacancy rates, by 0.1% to 1.1% in the first increase since the start of the year.

Yet, despite the nominal rise in vacancies, rent prices are still climbing as demand continues to outpace supply according to data from SQM Research.

In Sydney and Melbourne, Vacancy rates held steady at 1.6% and 1.9% — but are still at the lowest levels in years while Brisbane’s vacancy is at 0.7% — the lowest on record.

Rental markets across Perth, Canberra, Adelaide, Hobart and Darwin posted up to 0.2% percentage point increase in vacancy rates during the month — still at their tightest levels in decades.

The Gold Coast also recorded a 0.2% rise in vacancy rates to 0.5%, it was up by 0.1% to 0.6% on the Sunshine Coast, climbing by 0.5% to 2.1% in Byron Bay.

In the past 30 days, rents have risen by another 1.4%, following a 2.4% rise the previous month.

Asking rents for Sydney houses jumped by 19.4% over the year to May 12 — Melbourne climbed by 9.4%.

Elsewhere, Brisbane houses went up 20.9% in asking rents, Perth up 9.6%, Adelaide up 19.8%, 10.4% in Canberra, 15.5% in Darwin and 12.4% in Hobart.

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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